Determine if you’re really financially ready to buy a house (more on this later) and if so, how much you can comfortably afford

Make sure your credit is in good shape

Accumulate money for a down payment and/or closing costs

Get pre-approved for a mortgage

Start looking

Financial Aspects: The cash outflows of buying and owning a home can generally be broken into two categories: Upfront money you’ll need to buy a place, and ongoing money you’ll need to keep it.

Upfront: The upfront outflows typically include money for a down payment and closing costs. If you’re using a conventional loan you’ll need anywhere from 5% - 20% for a down payment. On a $350,000 house, that’s $17,500 - $70,000. Even if you’re eligible for a low or no down payment mortgage like a VA loan you’ll still have fees to pay up front. The lowest a VA funding fee with no down payment is currently 2.15% but it could be as high as 3.3%. On a $350,000 loan that equates to between $7,525 and $11,550 and you might incur other upfront costs as well. While it might be possible to roll these fees into your mortgage balance, it’s usually not advisable to do so. Having cash up front to cover them is a better idea. Check out the VA website for more information about VA loans.

Ongoing: While the upfront money you need only to buy a house only falls into a couple categories, the list of possible ongoing cash flows is much longer. First, you’ll have a mortgage payment. Each payment will typically include the actual loan payment plus your homeowner’s insurance, real estate taxes, and possible private mortgage insurance (if you use a conventional loan and put down less than 20%). So, for a $330,000 through a 30 year mortgage at a 4.5% interest rate, the principle and interest portion of your payment would be $1,672 per month. Homeowners insurance, real taxes, and mortgage insurance typically run about 2-3% of the home’s value on an annual basis. On a $350,000 house this could add another $600-$900 per month to your payment so in total, you could be looking at a monthly payment of $2,300-$2,600. Of course, these are just estimates so you’d want to get real numbers for your area before your proceed.

Finally, when you own a home you’ll have a lot more expenses each month than just these. You’ll also have utilities, maintenance and repair costs just to name a few. These will easily add hundreds of dollars per month to your total outflow.

For some additional thoughts on whether or not now is a good time for you to buy a house, I encourage you to take a look at this short video I recorded on the subject.